HOW TO USE THE COT REPORTS
Despite what you may have read from other traders (people who only looked at it for a few years), it is not a black-and-white situation. Just because the Commercials, the largest players in the marketplace, have been buyers does not mean a market will rally. How can that be true?
Let’s say you are a Commercial in Sugar. You need sugar to make candy. If the price of Sugar goes down; you will buy Sugar. In fact the more it declines, the more sugar you will buy in the futures markets now, for delivery later on when you will be making candy.
Your main concern is how much the sugar in your candy costs. As a Commercial you don’t care much about what price will do… no… you care about buying so you can take delivery and whip of a bunch of Taffy to sell for a profit.
To be continued, stay tuned!
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